FEET closure

JohnWinder

To keep a triple A rating as a fund manager, with the likes of Morningstar, it probably doesn't do to have one of your few funds underperform the index it's measured against by 60% over a period of 10 years. That would test any investor's faith, as it has tested and found wanting Smith's faith in their abilities to make 'active' work in the very environment (emerging markets) the analysts were supposed to be able to find an edge.

Prism

JohnWinder said:

To keep a triple A rating as a fund manager, with the likes of Morningstar, it probably doesn't do to have one of your few funds underperform the index it's measured against by 60% over a period of 10 years. That would test any investor's faith, as it has tested and found wanting Smith's faith in their abilities to make 'active' work in the very environment (emerging markets) the analysts were supposed to be able to find an edge.

It certainly got off to a weak start which has been difficult to recover from. The last five years have been ok, outperforming the index, but that hasn't been too difficult as the index has been poor. I would say that investing in emerging markets at all can test an investors patience if they pay attention - those in a global all countries index probably don't notice.

I doubt he cares too much what the ratings from Morningstar and the like are since they are very much focused on short term performance. Besides, he hasn't been manager of FEET for a few years.

aroominyork

Deleted_User said:

Prism said:

JohnWinder said:

To keep a triple A rating as a fund manager, with the likes of Morningstar, it probably doesn't do to have one of your few funds underperform the index it's measured against by 60% over a period of 10 years. That would test any investor's faith, as it has tested and found wanting Smith's faith in their abilities to make 'active' work in the very environment (emerging markets) the analysts were supposed to be able to find an edge.

It certainly got off to a weak start which has been difficult to recover from. The last five years have been ok, outperforming the index, but that hasn't been too difficult as the index has been poor. I would say that investing in emerging markets at all can test an investors patience if they pay attention - those in a global all countries index probably don't notice.

I doubt he cares too much what the ratings from Morningstar and the like are since they are very much focused on short term performance. Besides, he hasn't been manager of FEET for a few years.

So it did better when he wasn't the manager? OK.

I would not be surprised if he's more concerned with his reputation from running an underperforming fund than from the loss of fees from FEET. Not because he isn't motivated by money - but because he is! FEET has about £300m assets, and Fundsmith Equity has about £29bn - nearly 100x more. If reputational damage led to even a tiny outflow of funds (or to a smaller inflow than it would otherwise have) from his main fund, that could easily cost him more in fees than closing FEET. And the inflows it has achieved are to a large extend based on his reputation.

Smithson has about £2bn assets, so a lot more than FEET, but still less than 1/10th of Fundsmith Equity.

That's a wise perspective and I think TS made a clear choice is never referring to anything except his main fund at the high profile AGM. Even Fundsmith Sustainable, which I hold, doesn't get a look in.